JPY Currency Pair 2016
Morgan Stanley: Japanese Yen will become a real star in 2016
The yen next year will lead in growth and will become a real star in the global foreign exchange market with turnover of $5.3 trillion a day, according to the Morgan Stanley’s analysts.
The forecast of the Bank is that the Japanese currency will strengthen by the end of 2016 to 115. The analysts surveyed by Bloomberg, on the contrary, waiting for the weakening of the Japanese currency. Their forecast in average is near to 126. That’s why Morgan Stanley recommends buying the GBP/JPY, JPY/CHF, JPY/KRW and the JPY/CNY pairs traded in offshore markets.
According to experts of Morgan Stanley, the yen is the most undervalued among other currencies of developed countries with long-term perspective, it is at extremely low level. Since April of 2013, when the Bank of Japan introduced unprecedented stimulus measures, the yen fell more than 20% in pair with the dollar.
However, several banks have opposite point of view. Japan's economy will face significant challenges. The targets for inflation are unreachable at the moment, and there is a negative dynamics of GDP growth. Goldman Sachs analysts admit that slowing exports may also exert pressure on the yen. According to experts from RBC, buying the dollar against the yen is the best way to bet on rising interest rates in the US.
The USD/JPY now is traded on level of 112. Here is a difficult situation for the USD/JPY, but let's try to predict what to expect from the USD / JPY currency pair 2016. The first thing to be noticed is that the test of the support area is on the relative strength indicator, which may points to the attempt of correction of the Japanese yen in early March of 2016.
There is also a test of the lower border of the rising channel, which also indicates the growth of the USD / JPY currency pair 2016 to the area above the level of 116. The growth of the Japanese yen in March is not to be expected, as you could see from the weekly chart of the USD/JPY. Pretty soon there will be a quick test of the trend line on the RSI, which will ultimately drop the pair even lower.
The EUR / JPY currency pair 2016 is globally traded on the decline at the third wave. The first component forms its own structure.
At the moment the market is trading on the development of central part of continuation pattern of the downtrend, so the forecast for the EUR / JPY currency pair 2016 suggests that the fall will already occur at the beginning of the year. The target of this downtrend structure is the area near the level of 128. This target is going to be reached by May in the coming year.
Then the possibility of recovery with the correction to the level of at least 133 is considered to happen by August. After that the fifth wave is going to test the level of 125.
The GBP / JPY currency pair 2016 is globally traded on the decline at the first wave. The market almost breaks the growth channel. The target is on the level near 147. Such a decline is about to repeat during five waves.